Venture Capital

 

Why should Councils have the ability to levy ratepayers for venture capital? They should concentrate on core services and not get involved with running businesses. The track record of Councils running businesses is abysmal.

 

Consider the following article in today’s Western Leader:

www.stuff.co.nz/auckland/local-news/western-leader/5374596/City-looks-at-buying-henderson-film-studios

 

Since June 2010, I have been expressing concern about Auckland Film Studios Limited (formerly Prime West Limited) and the involvement of Tony Tay. (see previous blogs on this site).

 

In May 2005, in a secret meeting, Waitakere City Councillors voted, on the basis of information provided to them, to proceed with a plan to form a private/public partnership to set up a company with less than 50% Council ownership, thereby avoiding the need for public accountability. It was proposed that the Henderson Valley Film Studios, land and buildings valued at $6m, be Council’s input into the new company, a $1m grant be received from Central Government, and a $9m cash injection be introduced from a private source, making in total a $16m investment. The predicted return for Council was 6 to 14% per annum. There was also a proposal for the setting up of a management company with $100,000 capital.

 

As it eventuated, in July 2006 Prime West Ltd became the company for the Film Studios with a partnership comprising $6m capital from Waitakere Properties Ltd and $7.5m from Tony Tay Trust Ltd. That same month Prime West Management Ltd was set up with total capital $1,000 in which Waitakere Properties Ltd had a $400 share.

By 30 June 2009 Prime West Management Ltd was insolvent but not before it had been advanced a loan of $50,000 by Waitakere Properties Ltd.

 

On 29 June 2010 Tony Tay Group Ltd went into liquidation, being yet another Tony Tay company in a chain of failures.

On 30 June 2010 I expressed my concern to a number of Waitakere City Councillors.

On 1 July 2010 I sent a series of questions to WCC’s CEO regarding Tony Tay.

On 7 July 2010 Bob Harvey stated in the Herald “This will have no effect whatsoever on the film studio. The future of the studios is guaranteed. We are fully booked for the next three years.”

On 8 July 2010 I raised my concerns at the Henderson Community Board meeting casting doubt on Bob Harvey’s assurances.

In the second week of November 2010 I rang Gary Swift, CEO of Auckland Council Investments Limited. He said he did not feel he had the right to ask questions about what had happened before 1 November. I was flabbergasted.

On 19 January 2011 I had a meeting with Doug McKay, CEO Auckland Council, expressing my concern about Tony Tay Film Ltd.

On 1 February 2011, Tony Tay Film Ltd, the majority partner of AFSL (Auckland Film Studios Ltd) went into receivership.

 

 

 

 

Recent figures for AFSL:

31 March 2009        Net Loss  $2,245,569

31 March 2010        Net Loss     $557,742

 

Total Assets:

31 March 2008       $14.968m

31 March 2009       $13.275m

31 March 2010       $11.147m

 

I have been denied access to the 2011 accounts but extrapolating back from an ACIL report earlier this year, the total asset value would be about $7.3m as at 31 March 2011. In other words the value of the Film Studios has halved over the last three years.

 

To me it is appalling that Councillors are charged with the responsibility of making multi million dollar decisions on the expenditure of ratepayer money when I am not convinced they can all read a profit and loss statement and a balance sheet, let alone understand them. There is far too much done behind closed doors at the exclusion of the ratepayers who have to fund the various decisions.

 

 

 

  

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